Critics Attack as Financial Reforms Unveiled By U.S. Treasury

Many items on Wall Street's wish list could be granted if the sweeping plan by the U.S. Treasury Department, unveiled on Monday to upend the country's financial regulatory framework, is successful.

Treasury Secretary Steven Mnuchin said in an interview that more than 100 changes, most of which would be made through regulators rather than Congress, have been suggested in the nearly 150-page report.

"We were very focused on, what we can do by executive order and through regulators," he said. "We think about 80 percent of the substance in the report can be accomplished by regulatory changes, and about 20 percent by legislation."

While only Mnuchin and Securities and Exchange Commission Chairman Jay Clayton have been approved by Congress, Republican President Donald Trump has gradually been nominating heads of financial agencies to carry out his agenda. Other agencies have leaders appointed by Trump's Democratic predecessor, Barack Obama or are operating under "acting" chiefs.

Reducing the powers of the Consumer Financial Protection Bureau (CFPB), which has been aggressively pursuing bad behavior by financial institutions, lightening the annual stress tests big banks must undergo and easing up on restrictions that they now face in their trading operations, are included in the changes proposed by the Treasury Department.

The way global capital standards are implemented to give U.S. banks a leg up against foreign rivals would be changed as the plan would also expand the authority of the Financial Stability Oversight Council, which is chaired by Mnuchin. Among other plans, fewer regulatory hoops than rivals with multitrillion-dollar balance sheets would have to be jumped by lenders with $50 billion or less in assets.

Banks like JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Wells Fargo & Co, Goldman Sachs Group Inc and Morgan Stanley would mostly be benefitted by the changes thhet the industry has long many of the proposed changes.

While some said they wished there were more specifics on tricky questions, such as what level regulators should set for banks' assets before subjecting them to stricter rules, mostly, industry trade groups applauded the proposal on Monday evening.

"This is the first time in a while where there's been an official undertaking where our concerns resonated with the folks in the driver's seat," said Rich Foster, senior counsel for regulatory and legal affairs at the Financial Services Roundtable, a trade group.

A dangerous one for U.S. consumers who lost homes and jobs during the 2007-2009 financial crisis and a handout to Wall Street were the comments that reform advocates and Democratic lawmakers made to criticize the plan.

It would "make it easier for big banks to cheat their customers and spark another financial meltdown," said Democratic Senator Elizabeth Warren, a critic of Wall Street. Treasury consulted with industry groups more than consumer groups, by a ratio of 17-to-1, while developing its report, noted her Democratic colleague Senator Sherrod Brown.

"The Treasury proposal advances ideas that have been pushed by industry lobbyists since Dodd-Frank was passed," said Lisa Donner, executive director of Americans for Financial Reform. "We need more effective regulation and enforcement, not rollbacks driven by Wall Street and predatory lenders."